Astera Labs vs. KLA: Which Semiconductor Stock Has More Upside?

Astera Labs ALAB and KLA Corporation KLAC are major players in the semiconductor industry. While ALAB focuses on high-speed connectivity solutions for AI-driven data centers, KLA provides advanced process control and inspection solutions that enable manufacturers to produce increasingly complex semiconductors used in AI data centers and applications.

Per the Fortune Business Insight report, the global semiconductor market size was $598.06 billion in 2025. It is expected to grow from $659.66 billion in 2026 to $1,477.06 billion by 2034. This shows a CAGR of 10.60% over the forecast period between 2026 and 2034. Both ALAB and KLAC are expected to benefit from this rapid growth pace.

So, ALAB or KLAC — Which of these Semiconductor stock has the greater upside potential? Let’s find out.

The Case for ALAB Stock

Astera Labs is benefiting from its robust and diversified product portfolio to address the growing demands of AI infrastructure and connectivity solutions, as well as its expanding partner base. It benefits from strong demand for its PCIe solutions, which have also been a major growth driver.

In the fourth quarter of 2025, ALAB expanded its product portfolio with custom NVLink Fusion connectivity solutions designed with hyperscaler partners to optimize heterogeneous AI infrastructure performance, improve energy efficiency and reduce cost across diverse next-generation AI workloads.

The company also expanded the Smart Fabric Switch roadmap with hyperscaler partners, adding new features to meet the needs of next-generation scale-up networking. Early interest from customers is pushing more investment into the quickly growing merchant scale-up switching market, which is expected to reach $20 billion by 2030.

Astera Labs strong demand for its Aries, Taurus, and Scorpio product families is expected to drive growth in the first quarter of 2026. The company expects first-quarter 2026 revenues between $286 million and $297 million.

The Case for KLAC Stock

KLA’s robust portfolio and its leadership in process control systems are enabling customers to manage increasing design complexity. Process control accelerates time to results by resolving process integration challenges during the fab ramp-up phase to optimize time to market for a diverse mix of semiconductor designs. 

The rising demand for more powerful chip systems is driving growth in advanced packaging.  KLA has seen significant momentum in this market, with advanced packaging revenue growing more than 70% year over year in 2025. This trend is expected to continue in 2026, with growth in the mid- to high teens.
 
The growing need for AI-driven applications is driving demand for advanced semiconductor manufacturing technologies. KLA's solutions play a critical role in enabling customers to deliver products required for AI, while its systems utilize AI-driven analytics to optimize chip manufacturing and accelerate innovation.

KLA is expected to benefit from the expansion of the core wafer fab equipment market, which is forecasted to grow in the high single to low double digits in 2026. The advanced packaging market is also projected to grow at a similar rate, reaching approximately $12 billion. It is also poised to capitalize on several industry trends, including the rising demand for AI infrastructure, growth of advanced packaging and the increasing semiconductor content across diverse end markets.

Price Performance and Valuation of ALAB and KLAC

In the trailing 12-month period, shares of ALAB and KLAC have surged 53.3% and 102.9%, respectively. The outperformance of KLAC stock can be attributed to its dominant process control market share, strong AI infrastructure investment, and strong momentum in advanced packaging.

Despite expanding partnerships and its leadership in connectivity solutions, ALAB is suffering from a shift toward a higher mix of hardware sales, which impacted its profit margins. Increased operating expenses from expanded R&D efforts and recent acquisitions also impacted performance. Challenging macroeconomic uncertainties and stiff competition also remain a concern.

ALAB and KLAC Stock Performance

Valuation-wise, ALAB and KLA shares are currently overvalued, as suggested by a Value Score of F.

In terms of forward 12-month Price/Sales, ALAB shares are trading at 15.69X, lower than KLA’s 13.08X.

ALAB vs KLAC Valuation

How Do Earnings Estimates Compare for ALAB & KLAC?

The Zacks Consensus Estimate for ALAB’s 2026 earnings is pegged at $2.39 per share, which has increased 4.36% over the past 30 days. This indicates a 29.89% increase year over year.

Astera Labs, Inc. Price and Consensus

Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. Quote

The Zacks’ Consensus Estimate for KLAC’s fiscal 2026 earnings is pegged at $36.58 per share, which has increased 2.49% over the past 30 days. This indicates a 9.92% increase year over year.

KLA Corporation Price and Consensus

KLA Corporation price-consensus-chart | KLA Corporation Quote

Conclusion

While both ALAB and KLAC stand to benefit from the booming semiconductor market, KLAC offers a greater upside potential due to its strong leadership in process control, faster-growing advanced packaging business and stronger earnings momentum.

Astera Labs’ strong fundamentals, expanding partnerships, and rising AI demand reinforce its leadership in connectivity solutions. However, challenging macroeconomic uncertainties and stiff competition remain a headwind.

Currently, KLA sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than ALAB, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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